Financial Globalization and Democracy in Emerging Markets

This text highlights the financial crises in Mexico and South America (1995) and in East Asia (1997). It explores the risks from portfolio capital flows to democracy in countries like Mexico, Brazil, Russia, India, Vietnam, Thailand and Indonesia. The contributors lament the economic and political strains on governments forced by global markets to reduce expenditures and employment drastically in order to defend their currencies. Possible silver linings of financial globalization include the discrediting of incumbent authoritarians and external reinforcement for sound macroeconomic policies.